A legal challenge seeking to halt New York City’s new pied-à-terre tax is expanding, with four additional homeowners joining the case and alleging serious errors in the Mamdani administration’s rollout — including one tax notice that was allegedly sent to a neighbor living 27 floors away.
The new plaintiffs have joined a lawsuit brought by attorney Randy Mastro seeking to suspend the surcharge on high-value second homes in New York City. The case argues that problems with the city’s implementation and exemption system have improperly placed primary residences at risk of substantial new tax bills.
One of the newly added plaintiffs is real estate executive Kenneth Fishel, who says the city Department of Finance notified him that his Upper East Side Park Avenue co-op could be subject to the tax even though he has lived there and paid taxes from the residence for years.
Making matters worse, according to the lawsuit, the Department of Finance incorrectly addressed Fishel’s notice and sent it to a neighbor who lives nearly 30 floors below him.
“Fishel only learned of and obtained a copy of the notice because he ran into his neighbor living 27 floors below him on the elevator,” the suit states.
“If I hadn’t run into him in the elevator, I never would have known, and I would have been billed for the full tax,” Fishel told The Post on Tuesday.
Fishel then encountered another problem when he attempted to request an exemption. According to the lawsuit, the city’s online system indicated that an exemption application had already been submitted for the property — “likely due to the fact that the mailed notice did not even list the correct names.”
The Department of Finance sent approximately 17,000 notices to property owners warning that they could face tax bills reaching five figures unless they successfully sought exemptions. The tax was approved by state lawmakers and Gov. Kathy Hochul earlier this year.
City officials said last week that approximately 4,290 homeowners who received the notices had challenged their inclusion. Of those cases, 1,906 exemption requests had been approved at that point.
The four new plaintiffs, whose primary residences are in Chelsea and on the Upper East Side, all maintain that they have applied for exemptions but have not yet received approval, according to the court filing.
Their lawsuit describes the process as a “tangled morass of an exemption regime,” arguing that homeowners who should not owe the surcharge have nevertheless been forced through a confusing administrative process to prove that their properties are their primary residences.
The tax applies to certain unoccupied properties that are not their owners’ primary residences, including one- to three-family homes worth at least $5 million and condominium and co-op units valued at $1 million or more.
The plaintiffs argue that the city’s “messy, ill-considered, and atextual ‘exemption’ scheme” has failed to promptly remove them from the pool of homeowners potentially facing the surcharge.
Unless the situation is corrected, the plaintiffs say they will “continue to suffer irreparable harm in attempting to apply for an ‘exemption’ to a tax that was not designed to burden them in any way.”
Court filings show that each of the newly added homeowners received notices estimating that they could owe between $45,000 and $58,000 under the pied-à-terre tax.
Among them are Chelsea residents Stephen and Sandra Shore, who say they have occupied their home for more than three decades and consistently paid their taxes, yet still received a notice warning that they could owe the additional levy.
According to the lawsuit, the Shores repeatedly tried to submit an exemption request through the Department of Finance’s system but were unsuccessful. Eventually, they resorted to sending a registered letter “in an attempt to simply submit their application.”
Another plaintiff, Carla Stearns, lives near Mastro in Carnegie Hill and says she and her husband have occupied their brownstone since purchasing it in 2017. The city values the property at approximately $6.8 million.
Although Stearns says she pays city taxes and owns no other property, she was nevertheless notified that she could face roughly $55,000 in additional taxes unless she successfully applied for an exemption.
Fishel sharply criticized the city’s handling of the program after appearing at a City Council oversight hearing focused on the troubled rollout.
“We pay taxes here in the city, and we have for a long time. And the administration of this process has just been horrendous,” Fishel told The Post.
“They’ve totally botched the process,” he said. “They really need to withdraw all the notices and start again.”
The newly added homeowners join the lawsuit’s original plaintiffs: Staten Island residents Rachel O’Brien and Carmine Morano, the wife and father of City Councilman Frank Morano, and Chelsea resident Simon Hedley. Of those three, Hedley was the only one who had received a tax notice.
The litigation previously succeeded in temporarily stopping implementation of the tax when a Staten Island judge issued a pause shortly after the lawsuit was filed earlier this month. Mayor Zohran Mamdani’s administration challenged that decision, and an appellate court subsequently overturned the temporary order, allowing the rollout to proceed while the broader legal fight continues.
Mastro has argued that adding the four homeowners strengthens the case against the city. In a letter to the Staten Island judge overseeing the dispute, he said their participation would “eliminate” the “specious mootness arguments” raised by the city after Hedley, who has described himself as a Mamdani supporter, was granted an exemption following his application.
{Matzav.com}
